Macy’s (they also own Bloomingdale’s) reported earnings pre-market today and the stock is soaring, already up 7% this morning, Macy’s reported earnings of 47 cents per share for the 3rd quarter of 2013, up 31% from a year ago.  This is significantly higher than analysts’ estimates of 39 cents.  They also had revenues of $6.28 billion, up 3.3% from a year ago and better than the $6.19 billion expected by Wall Street.

Perhaps more importantly, Macy’s is providing an optimistic outlook for the key fourth quarter, which in retail is just about the be-all end-all (Black Friday, Christmas shopping).  The CEO mentioned that the company plans on hiring 83,000 seasonal workers for the holiday shopping season.

My advice here is not to go out and buy Macy’s stock this morning.  But Macy’s very strong performance means I’m going to be keeping a close eye on other retailers, both as their earnings are coming up and as we head into the holidays.  I’m currently long Restoration Hardware and may make some earnings plays in the next few weeks on other retailers.

In my opinion, I think most of the growth is going to come from higher end and luxury retailers like .  We already saw Macy’s and Michael Kors (KORS) soar this past week.  And according to Bain and Company estimates revenues from the sale of luxury goods can grow by about 6% annually through 2015 — almost twice the global GDP growth rate.

Notable retail earnings this week:

  • Kohl’s (KSS) – Thurs, Nov. 14
  • WalMart (WMT) – Thurs, Nov. 14
  • Nordstrom (JWN) – Thurs, Nov. 14

I will definitely not be buying WalMart, and in fact may short it. Like I said, growth is looking stronger in the higher end categories and WalMart has showed declining growth recently.  They’ve also been having issues with strikes and public opinion.

I love, love, love Nordstrom.  Mostly because they indulge my chronic need to buy and return.  I think this stock is a buy regardless of whether you are doing it as an earnings play or a longer term hold.  My only hesitation for earnings is that this year they switched the Anniversary sale to be totally in the 2nd quarter, whereas before it overlapped the 2nd and 3rd quarters (and they’re reporting 3rd quarter earnings).

Next week even more retailers are reporting: Abercrombie & Fitch (ANF), Best Buy (BBY), Dollar Tree (DLTR), GameStop (GME), Home Depot (HD), J.C. Penney (JCP) and Target (TGT).  More thoughts on these next week.


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